The Botswana Building Society was established on 13 December 1976 and had assets of only P4,108,000 after three months of business as at 31 March 1977. Its assets consisted of Government stock of P200,000, advances of P2,505,000 and cash and investments amounting to P1,264,800. The advances comprised 488 mortgages taken over from the then United Building Society of SA, of which the Society had until then operated as a branch. Only nine new home loans were advanced in its first three months of operation.

The liabilities consisted of P2,644,700 in capital, mostly subscribed to by Government in shares, a statutory reserve of a mere P200, and retained earnings of P1,900. Savings and fixed deposits accounted for P1,388,700, with creditors and provisions making up the balance.

During its first ten years of operation, the Society was initially restricted by law to lend only against the security of immovable urban property. The Act was amended in April 1986 to permit lending in rural areas. Since then, the number of mortgages in respect of rural properties has grown to 382, representing 18% of our mortgage book, compared with 1,829 advances in urban areas, as at 31 March 2002. This reflects the commitment to contribute to the social and economic upliftment of Batswana, most of whom reside in rural areas of the country.

Up until 1986, the Society restricted its lending only to residential properties, as a matter of policy. It was only in 1986 that the Society ventured into commercial lending for the first time, and now has on its books 132 advances on commercial undertakings. These represent 34% of the Society's mortgage book in terms of value.

The exceptional growth of the Society over the past 30 years can best be measured by the phenomenal increase in its reserves, from only P2,100 in March 1977 to just under P42 million in March 2002. The Statutory reserve alone increased from a mere P200 to almost P30 million over this period.

The Society has consistently met its dividend obligations to its shareholders every year over the past 30 years of its existence. A bonus dividend of P500,000 was also awarded in 1992.

From the late 1980s, the property market experienced a downturn, resulting from the general economic slowdown in the country, which continued well into the mid-1990s. This significantly dampened the euphoria among investors in property development that had been spurred on by speculative borrowing, lured by unrealistically high investment returns from unsustainably high rentals.

A spate of repossessions followed as the market subsequently adjusted itself to more affordable and realistic rentals. This brought in a sense of realism in property investment among borrowers, who were forced to consolidate their investment portfolios and tone down their earlier appetite for unbridled investment in property.

While it did not come out unscathed by the resultant decline in demand for loans, the Society welcomed this development and actively encouraged its borrowers to adopt a more pragmatic and conservative approach towards borrowing for investing in property. What has occurred since 1995 has been a steady resurgence in loan demand, motivated by more caution and a sensible reading of the market by investors, as the economy recovered from recession.

It is pleasing to report that the environment now prevailing in the market points to firm growth in both demand and returns in property investment well into the future, as the economy of the country continues to show prospects of a robust growth as the new millennium unfolds.

As at 31 March 2002, the Society has achieved an impressive growth with assets in excess of P470 million. Much of the Society's growth over the past 34 years has been made possible by the continued support of Government, the Society's major shareholder, in both material and practical form, consistent with the recognition that shelter is a basic human need.

The tax incentive provided by government on investments in the Society's shares has also ensured a steady flow of funds to, and a stable capital base for, the Society.

The Society deeply appreciates the contribution of government to this development, and for the various policies of the government in promoting home-ownership among its citizens, notably the partial guarantee offered by government on citizen home loans.